Some Japanese firms have, in past decades, used lifetime employment systems in which core workers were essentially guaranteed jobs for their entire careers. Other organizations, such as Hewlett Packard and IBM have used similar systems. IBM has since dropped their lifetime employment policy, and HP relaxed its program (it now calls lifetime employment an objective but not a guarantee). Within other firms, seniority-based incentives are strongly used, but no formal policies governing lifetime employment exist.

A. What type of firms are more likely to offer lifetime employment or similar guarantees? Why? Explain briefly.

B. Under what circumstances will firms adopt such policies? Abandon such policies? Explain briefly.

C. What are the implications of strong seniority-based incentives for the firmâs strategy? The firmâs ability to adapt to new business environments? Explain briefly.